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Broomfield's ARCA biopharma seeks $20M to fund drug, stay in business

By Alicia Wallace, Camera Business Writer

Posted:
05/31/2013 05:14:25 PM MDT

Updated:
05/31/2013 06:02:18 PM MDT

Broomfield-based ARCA biopharma this week set the pricing for a $20 million equity offering that officials hope will not only fuel the development of its lead cardiovascular drug, but also keep the company operational.

ARCA (Nasdaq: ABIO, $1.62) is offering 125,000 shares of its Series A convertible preferred stock at $160 per share, 12.5 million shares of common stock issued upon conversion, warrants to purchase up to 6.25 million shares of its common stock and 6.25 million shares issued upon exercise of the warrants.

After placement agent's fees, ARCA could receive $18 million from the offering and intends to use those proceeds to fund development and clinical trials for Gencaro, a genetically targeted drug for atrial fibrillation and cardiovascular diseases, and also for working capital.

Company officials expect the offering to close on June 4.

The timing could be critical for ARCA, which disclosed that officials have “substantial doubt” about the company's ability to remain operational beyond September of this year.

“We are unable to assert that our current cash and cash equivalents are sufficient to fund operations beyond that date, and as a result, there is substantial doubt about our ability to continue as a going concern beyond September 2013,” officials said in the filing made Thursday with the Securities and Exchange Commission.

The company has $3.5 million in cash, cash equivalents and short-term investments and has conducted personnel furloughs in recent quarters to shave costs, according to the filing.

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The firm has a market capitalization of $5.16 million.

To support further development of Gencaro and initiating a trial to test a hypothesis — that there are generic variations in the cardiovascular system that could predict how patients respond to Gencaro — ARCA ultimately is looking to raise “substantial” capital or enter into a strategic partnership, officials said.

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